Citi granted emergency injunctive relief

Judge temporarily blocks Wells Fargo's bid

Excerpt:

Citigroup fired the first shot in what could be a prolonged legal battle, persuading a New York judge to temporarily block Wells Fargo from acquiring Wachovia, Citigroup announced in a news release sent late Saturday night.

Citigroup has accused Wells Fargo of wrecking its plan to acquire Wachovia's banking operations for $2.2 billion, or $1 a share, in a deal arranged by the Federal Deposit Insurance Corp. Four days after that deal was struck, it fell apart when Wachovia agreed to Wells Fargo's offer to pay seven times as much for the entire company.

The underlying battle is over which company will emerge from the current economic crisis in a stronger position among a smaller number of global financial giants. A person briefed on the situation said that Citigroup was seeking a total of $60 billion in damages.

Citigroup contends that the deal with Wells Fargo violates an agreement that prohibited Wachovia from having any sale or merger discussions with anyone other than Citigroup until Oct. 6. The order issued by a judge on Saturday extends the term of that agreement until further court action, according to Citigroup's news release.

“Wachovia believes its agreement with Wells Fargo is proper, valid and in the best interest of shareholders, employees, and the American taxpayers," Wachovia spokeswoman Christy Phillips-Brown told the Observer early Sunday. "Under that agreement, Citigroup is always free to make a superior offer to Wachovia.”

The litigation could be a blockbuster, pitting some of the nation's largest surviving financial institutions against one another and giving work to the most expensive legal talent money can buy. Citigroup is represented by the New York lawyer Gregory Joseph; Wachovia by David Boies of Boies, Schiller & Flexner; and Wells Fargo by Wachtell, Lipton, Rosen & Katz, according to people briefed on the matter.

Comment: Solution: To the highest bidder.